S&P lifts Kepco, subsidiaries stand-alone ratings

S&P said it affirmed the AA long- and A-1+ short-term corporate credit ratings on Korea Electric Power Corp. (Kepco).

The agency also said it affirmed the AA long-term corporate credit ratings on the four subsidiaries of Kepco: Korea Hydro & Nuclear Power Co. Ltd., Korea East-West Power Co. Ltd., Korea Midland Power Co. Ltd. and Korea South East Power Co. Ltd.

The agency also said it affirmed the AA debt ratings on Kepco and its four subsidiaries.

S&P also said it revised upward the stand-alone credit profile for Kepco to BBB+ from BBB and the stand-alone credit profile of the four subsidiaries to BBB from BBB-.

The outlooks on all of the ratings remain stable.

The upward revision of the stand-alone ratings reflects an expectation that the companies are likely to continue to improve their financial metrics in 2016 through 2018, S&P explained.

Kepco has started generating positive free operating cash flow for the first time since 2015 and this trend is expected to continue for the next two years, which will reduce or at least maintain current debt levels, the agency said.

Kepco and its subsidiaries are likely to benefit from increasing contribution from nuclear and coal-fired power generations with better profitability, S&P added.

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